Houses taking twice as long to sell as they did last year
Cornerstone Tax discusses the news that houses are taking twice as long to sell as they did last year as rising rates continue to affect the housing market.
According to Hamptons, houses are taking twice as long to sell today as they did a year ago, as rising mortgage rates are affecting buyers. It took sellers 49 days on average to find a buyer in May, an increase from 26 days in 2022, marking the longest wait in any May since 2013. The data shows that four-bedroom houses were the slowest to sell, taking 60 days on average to agree a sale last month – more than double the 27-day average wait in May 2022.
This is the latest impact the housing market has felt from rising mortgage rates, as nearly 10% of mortgages have been taken off the market due to concerns about increasing interest rates, according to data from Moneyfacts.
The figures indicate that approximately 800 residential and buy-to-let deals have been withdrawn, and average rates on two- and five-year fixed deals have also risen. This comes after the Nationwide building society announced that mortgage rates on new fixed deals would increase by up to 0.45 percentage points in response to higher-than-expected inflation figures.
The Office for National Statistics (ONS) revealed that while Britain experienced the sharpest fall in inflation since August, with the annual rate dropping to 8.7% in April, it was not as significant a decline as predicted. This marked a decrease from 10.1% in March, with UK inflation peaking at 11.1% in October. According to ONS data, electricity and gas prices accounted for about 1.4 percentage points of the decrease in the annual inflation rate.
Nationwide stated that it is raising its mortgage rates to ensure their sustainability, as investors now believe the Bank of England will have to increase rates to as high as 5.5% from the current 4.5%, which will impact mortgage rates throughout the UK. The average two-year and five-year fixed-rate mortgage rates have also increased since last week, currently standing at 5.38% and 5.05%, respectively, according to Moneyfacts. Meanwhile, the number of residential mortgages has decreased by 373, going from 5,385 deals to 5,012.
House prices fell at their fastest annual pace for nearly 14 years in May, according to data from Nationwide. The building society revealed that prices in the year to May fell by 3.4%, the biggest fall since July 2009, as the average property price now stands at £260,736.
David Hannah, Chairman at Cornerstone Group International, discusses the effect of rising rates on the property market:
“The latest house data from Hamptons showing that houses are taking twice as long to sell today as they did a year ago highlights the issues which the housing market is currently facing.
“A rise in mortgage rates due to inflation figures being stronger than expected is unwelcome news for homeowners and effects both buyers and sellers alike.
“Even though the average price of a property has predominantly fallen over the past few months, the increase in mortgage rates and the decrease in availability of mortgages are significant problems.
“We all know the challenges the UK’s property market is currently navigating – inflation and rising interest rates are causing a whole raft of issues, even though we witnessed a fall in inflation last month.
“We’ve seen a surge in building costs and building materials which is slowing down construction and worsening the issue of supply and demand.
“However, recent data from Rightmove shows that the average estate agent currently has 35 homes for sale compared to 20 last year, showing signs that supply is increasing.
“Despite rising interest rates, I still see the main obstacle for first-time buyers being the ability to save enough money for a deposit and covering all of the added costs involved in purchasing a property as our data shows.”
Kindly shared by Cornerstone Tax
Main article photo courtesy of Pixabay
